In every industry or business there are three distinct groups that can be identified with regards to their position in the market place. They are:
- Pioneers- Products and services that offer unprecedented value and are powerful sources of profitable growth. Their value curves are different from the competitions on a strategy canvas. All pioneers are blue oceans.
- Migrators- are in between pioneers and settlers. They offer improved value, but not innovative value.
- Settlers- do not contribute to much future growth and are stuck in a red ocean. Their value curves match the basic shape of the industry.
Businesses that are interested in profitable growth would need to first identify into which of these groups their current products and services fall into and determine which of these products has the most potential for a change in its current status. A useful exercise for such companies is to plot the company’s current and planned portfolios on a PIONEER-MIGRATOR-SETTLER (PMS) Map.
A PMS map can be described as pictorial description of the directions for getting from a point A to a Point B. It can also be defined as a graphical or pictorial representation of the current position of the products and services of a company with the relations to its competitors (i.e. pioneer, migrator or settlers) and the planned position of these products and services in the future.
These products and services are depicted on the map as circles the size of which depends on the total revenue that product or service brings in. i.e. the larger the sales revenue accrued from that product or service the larger the circle. As noted earlier in order to provide a more practical approach Polo Ralph Lauren T-shirts have been chosen as a case study an as such the PMS map would be applied to this product.
The objective of drawing a PMS Map for Polo Ralph Lauren T-Shirts is to help visualize, plan, and predict its future growth and profit. The PMS Map helps to identify the group each of these products fall into and the amount of sale revenue accrued from each of them and also to determine which of these products would benefit most from migration to the pioneer group in the future and why.
At this point we would like to note that the overall objective of the PMS Map is to create a blue ocean for the product or service. With regards to the Polo Ralph Lauren T-Shirt product range there are 7 different products which shown in the figure below:
In determining the choice of products to move to the pioneer segment in the future a number of factors were considered. They are:
1. Density of the segment i.e. how competitive is a particular segment in a particular industry: this is considered because it helps us determine how deep into the red ocean the product or service is.
2. Current ability of the product to generate revenue in its particular segment: this is considered because if the segment the product is in at the moment is highly competitive and the product still brings in a lot of revenue, if the blue ocean strategy is applied to this product it would markedly improve the revenue generated.
3. Value innovation potential of the product i.e. how easily does the current state of the product lend itself to value innovation
It is important to note that these factors are not applied in isolation but together. With the above in mind the following products were chosen to be moved from their current segment to the pioneer segment:
Polo RL from settler segment --> Pioneer segment
POLO RL - At the moment the settler segment for T-shirts is highly populated and competitive. Notwithstanding Polo RL still does well. With this in mind we can only imagine the level of revenues that would be generated if the blue ocean strategy is applied and it is moved to the pioneer segment.
This is the first step in unlocking the blue ocean strategy creating a PMS map for whatever product or service that is of interest to you. The next step is the creation of the "As Is" Strategy canvas and would be seen in part 3 of the series. Look out for it.
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